<Customs Clearance>Sichuan Pepper No.16 TLDR： China's unusually tough countermeasures against US tariffs this time are not due to lack of careful consideration, but rather the confidence it has gained from actively adjusting its structure, changing labor costs, and trade asymmetry since 2018 It can be foreseen that the trade war will remain deadlocked, the global supply chain will disintegrate, China's transformation will accelerate, and the division between the East and the West will become deeper and deeper. It depends on which side cannot hold on first (currently, the lower class people in China are more tolerant than the United States) ——— 1、 Dongda is holding back its big moves The trade war began in 2018, and the United States used "trade deficit" and "technology theft" as excuses, Tariffs came round after round, and China was a bit confused at first, but didn't wait to be beaten. Liu He, who was 18 years old, was in a hurry to gather materials and negotiate at the White House 😂 In recent years, China has taken the initiative to do several things: Market shift: The proportion of exports to the United States has decreased from 20% to 16%, buying gold to store gold, and the proportion of non US soybean imports has decreased to 23% (Brazil, as a substitute for soybeans, is the core of automated farming in the United States), settling with Russia/Saudi Arabia in local currency, and so on Domestic demand rescues the market: driven by domestic consumption and infrastructure, the contribution rate of domestic demand to GDP growth in 2022 exceeds 50%, and the upgrading of the new energy industry chain (supporting domestic products) Supply chain transfer: Supply chain manufacturing is transferred to Vietnam with lower labor costs, while slightly more high-end manufacturing remains in China. Approximately 40% of Vietnam's basic processing enterprises have Chinese investment —— 2、 The Three Cards of Dongda 1. Labor costs: China is not cheap, the United States is more expensive The Chinese economy has been flying for 40 years, and the labor market is no longer the era of "many people are easy to manipulate" There is a "Lewis turning point" in economics, which means that labor has gone from surplus to shortage. China crossed this point around 2010. Nowadays, Chinese workers' wages are three times that of Vietnam, but still 1/7 of those in the United States Of course, the United States is not born with expensive labor, and other countries are not born with cheap labor either. However, in order to exchange for the US dollar, other countries have no choice but to lower their exchange rates when production efficiency is not optimal, in order to gain price competitiveness. Essentially, this is also a way of manipulating exchange rates to attract foreign capital to move in Before World War II, before the internationalization of the US dollar, the United States was the world's largest manufacturing country, with steel production exceeding the sum of all countries in the world. This was the strategy of the Republican Party when they came to power (to protect the red neck and the father of the old money donor), while the Democratic Party of New Money remained in office, and the strategy changed. By protecting high-end industries, the United States maintained its competitiveness in high-end industries, distributed low-end industries, and let the world work for the United States By transferring low-end industries, maintaining trade deficits, exporting US dollars to the world, and bringing manufacturing back to China and Southeast Asia Trump wants labor-intensive companies to return to the United States, so that basic industrial processes can be produced and sold domestically (mainly for the sake of war efficiency), which is currently quite difficult Tariffs ->Increased procurement costs for enterprises ->Increased unit labor costs ->Why don't we all die together Finally, it depends on who can't hold on first. Should China pay for your American Dream or should Vietnam, Indonesia, Cambodia, and Laos pay for it? 2. Trade structure: You hurt me, I itch What does China sell to the United States? Mobile phones, computers, furniture, Americans have a hard time without these days. What does the United States sell to China? Soybeans, crude oil, just raw materials Tariff Plus: -US: Prices soar, eggs double in a year, furniture prices rise by 12% year-on-year in 2022 -China: Raw materials are more expensive, and companies are shifting to domestic sales. How about going through another round of hardship? Data shows that China's net exports to the United States fell from $400 billion to $290 billion, a decrease of 25% 3. Strategic adjustment: The trade war is forcing China to find a new path, Southeast Asian exports have increased by 30%, RCEP has been signed, and the European market has also been deepened. The proportion of manufacturing return to the United States to GDP is still 11%, far less than China's 28% 3、 Steady and steady 1. The tariff war is not over: the US midterm elections, geopolitical games, and the drama of tariffs still need to be sung. Don't expect to shake hands and make peace in the short term. How could it just fold 2. Supply chain fragmentation: Enterprises are running to Southeast Asia and India, while China is guarding the high ground. The global industrial chain has shifted from "China dominance" to "China+others", allowing ADC to survive in the jungle first 3. China's transformation is fast: the tariff war is the catalyst, high-tech, green energy, domestic demand, and now an RWA (Shandong RWA) has been added 4. The world is even more fucked up: the EU and Japan are struggling to survive in the cracks, RCEP and CPTPP are united, global multipolarity, global right-wing, and in the near future, it's not that short either. I estimate that there will be mobilization for war soon //Although this round of electronic gold narrative has not been effective since Trump's release (why does gold always break new highs? Do you understand?), fundamentally after BTC's "listing", the positive news has been exhausted and the weak narrative does not reflect its resistance to inflation and geopolitical risks. The market will tell you the correct answer